BILL ANALYSIS H.B. 2151 By: Bosse 04-12-95 Committee Report (Unamended) BACKGROUND Over 125,000 autos were stolen in Texas in 1993 with a value of 600 million dollars. These vehicles are then sold with switched identification plates or dismantled by "chop shops" and sold to both legitimate and illegitimate repair facilities. Many of these parts end up on totaled vehicles that cannot be safely rebuilt, but are ultimately resold to the unsuspecting public. Current law, (Vernon's Texas Civil Statutes, Article 6671-1) does not adequately provide for tracking the transfer of vehicles or vehicle titles. PURPOSE H.B. 2151 will establish a workable audit trail for law enforcement to track the transfer of salvage and non-repairable vehicle titles. This bill will specifically require surrender of a vehicle title upon payment of an insurance claim as well as provide for specific certificates of title for salvage vehicles or non-repairable parts vehicles. RULEMAKING AUTHORITY It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution. SECTION BY SECTION ANALYSIS Amends the Certificate of Title Act (Article 6687-1, Vernon's Texas Civil Statutes) by adding Section 37A. a) Defines "actual cash value", "automobile recycler", "demolisher", "insurance company", "late model motor vehicle", "major component part", "nonrepairable motor vehicle", nonrepairable motor vehicle certificate of title", "older model motor vehicle", "other negotiable evidence of ownership", "person", "rebuilder", "salvage motor vehicle", "salvage motor vehicle certificate of title", "salvage vehicle dealer", and "scrap metal processor". b) Sets forth vehicle title requirements. Requires an insurance company that acquires ownership of a late model salvage motor vehicle through payment of a claim to surrender the vehicle's certificate of title to the Texas Department of Transportation ( TxDOT ) and apply for either a salvage motor vehicle certificate of title or a nonrepairable motor vehicle certificate of title. Forbids the sale of the vehicle until such certificates are obtained and restricts the sale or assignment of title of such vehicles to salvage vehicle dealers only. States that this subsection does not apply to a vehicle that has been stolen and recovered and has no major component part removed, missing, damaged or destroyed. c) Sets forth title requirements for insurance companies that do not acquire ownership of a late model salvage motor vehicle after payment of a total loss claim. Requires the insurance company to require the vehicle's owner to surrender the certificate of title to the vehicle to the insurance company and to sign an application for a salvage motor vehicle certificate of title or a nonrepairable motor vehicle certificate of title to be submitted to TxDOT on behalf of the owner. Prohibits the owner of a late model salvage motor vehicle to which this subsection applies from transferring ownership of the vehicle unless the department has issued a salvage motor vehicle certificate of title or a nonrepairable motor vehicle certificate of title. d) Sets the following guidelines for transfer of late model motor vehicles and titles: prohibits a person that owns a late model salvage motor vehicle from selling, transferring or releasing the vehicle to a person other than a salvage vehicle dealer, the former owner of the vehicle, or a governmental entity; requires the salvage vehicle dealer who receives such vehicle with a certificate of title that is not a salvage or nonrepairable certificate of title to surrender the received certificate of title to TxDOT and apply for a salvage or nonrepairable certificate of title; requires a salvage vehicle dealer who acquires ownership of a late model salvage motor vehicle or a nonrepairable motor vehicle for the purpose of dismantling, scrapping or destroying the vehicle to submit to TxDOT a report stating such a purpose accompanied by the certificate of title for the vehicle. e) Sets guidelines for dismantling, scrapping or destroying older model vehicles. f) Requires a person, other than a salvage vehicle dealer or an insurance company, that acquires ownership of a late model salvage motor vehicle to surrender the certificate of title to the vehicle to TxDOT and apply for either a salvage or nonrepairable motor vehicle certificate of title before selling the vehicle. g) Prohibits an owner of a late model salvage motor vehicle that has been issued a salvage or nonrepairable motor vehicle certificate of title from selling the vehicle to anyone other than a salvage vehicle dealer in the state. h) Sets guidelines for application for a salvage motor vehicle or nonrepairable motor vehicle certificate of title. i) Sets guidelines for issuance of a salvage or nonrepairable certificate of title. j) Prohibits vehicles with salvage titles from operating on public highways. k) Sets forth requirements for application for a regular certificate of title for a vehicle for which a salvage motor vehicle certificate of title has been issued. l) Sets forth guidelines for issuance of a "rebuilt salvage" certificate of title based upon a completed application under subsection (k) of this section. m) Sets forth requirements for appropriate titles for vehicles brought from another state that has on any certificate of title issued by the other state a "rebuilt", "salvage", "nonrepairable" or similar notation. n) Prohibits a person who holds a nonrepairable motor vehicle certificate of title from i) operating or permitting the operation of the vehicle on a public highway and ii) transferring ownership unless authorized by law. o) States that an offense is committed if a person applies for a regular certificate of title knowing that the vehicle is a nonrepairable motor vehicle that has been rebuilt. p) Provides the basis upon which estimated cost of repair parts and estimated labor costs will be calculated. q) Requires different titles to be of different colors. r) Requires rebuilders to possess proper titles for cars in their possession. s) Allows a person that rebuilds a late model salvage motor vehicle with a salvage certificate of title or a person who assembles a late model salvage motor vehicle from component parts to apply for a certificate of title labeled rebuilt salvage. t) Exempts TxDOT and its agents, officers, and employees from liability for damages or injuries associated with the issuance of certain titles. SECTION 2: Repeals Section 37, Certificate of Title Act (Article 6687-1, Vernon's Texas Civil Statutes). SECTION 3: Effective date-contingent on passage of House Bill 2599, This act only takes effect if the enabling legislation takes effect. SECTION 4: Emergency clause. SUMMARY OF COMMITTEE ACTION Pursuant to a public notice posted on March 30, 1995 at 6:02 p.m., the House Committee on Transportation met in a public hearing on Wednesday, April 5, 1995 at 2:00 p.m. or upon adjournment, in room E1.014 of the Capitol Extension and was called to order at 6:30 p.m. by the Chair, Representative Clyde Alexander after the House recessed. The Chair laid out H.B. 2151 and recognized Representative Bosse to explain H.B. 2151. The Chair recognized the following persons who testified in support of H.B. 2151. Paul Dugger, Representing himself and law enforcement. Wanda Lindeman, Owner Auto Dismantler. The Chair recognized the following persons who testified in opposition to H.B. 2151. Milford "Pat" Smith, Farm Bureau Insurance Companies. Robert Grube, Farmers Insurance Group. Eugene Palmer, Allstate Insurance Company. Jim AuBuchon, Commercial Metals Company. Charles Wirth, State Farm Insurance Company. Bill Tallas, State Farm Insurance Company. Jonna Kay Hogeland, National Association of Independent Insurers. Marcia McAllister, Insurance Auto Auctions, Inc. The Chair left H.B. 2151 pending before the Committee. Pursuant to a public notice posted on April 7, 1995 at 5:04 p.m., the House Committee on Transportation met in a public hearing on Wednesday, April 12, 1995, at 2:00 p.m., or upon adjournment, in Room E1.014 of the Capitol Extension and was called to order at 3:58 p.m. by the Chair, Representative Clyde Alexander. The Chair laid out H.B. 2151 by Bosse, which was pending before the Committee. Representative Edwards moved that the Committee report H.B. 2151, without amendments, to the full House with the recommendation that it do pass. The motion prevailed by the following vote: Ayes (5), Nayes (1), Absent (3), Present not voting (0).